Figures are drawing the actual picture of the US economy. Increase in unemployment in September is 263k. This is reversing the downward momentum between April and August with a slight increase from August figure. US cumulative unemployment is standing at 9.8% after September. Investors who are ready to get a swine flu from a sneeze in those days reacted quickly by bringing down FTSE 100 index at the first days of last quarter of the year.
Housing market is ringing the bells too. Reuters informs repossession of a house for every 13 seconds, bringing worries that 6million houses are likely to be repossessed for the next three years. Inevitable and painful lagging effects of unemployment…
Despite these facts; change in the moods between early-April and now is incredibly huge! A change from depression expectations to growth cheers! It is understandable when considering the catastrophic nature of the first quarter of 2009 where we saw falls of 45.7% in Japan’s exports, 47% in German engineering companies’ export orders. And only in one single month! Nobody wants to even imagine what would happen if this percentage falls continued.
Bernanke is now “carefully optimistic” with slight emphasis of the previous announcement by saying “Recession is very likely over” this time he has a “but”, which is “It is still going to feel like a very weak economy for some time”.
The announcement is turning from big into realistic. This is parallel to the fact that no rational person will believe in pink clouds, not after US households saw their wealth shrinking by $14trillion!
Monday 19 October 2009
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